Oil tops $83 on hobbled dollar, bullish Chinese data

Perth: Oil prices bounced over 1% and topped $83 a barrel on Monday, thanks to a hobbled US dollar and weekend data that showed China’s crude oil imports surging by nearly 25% to more than 20 million tonnes in December.

Concerns over gasoline supplies following a fire at Korea National Oil Corp’s Newfoundland refinery in Canada, and cold weather in the US and Europe, are also lending support to prices.

US crude for February delivery rose 64 cents to $83.39 a barrel by 0414 GMT, after having risen earlier by 1.1%. The contract settled up 9 cents at $82.75 a barrel on Friday.

London Brent crude gained 70 cents to $82.07.

“The Chinese trade data is providing very strong underlying support. Combined with the US dollar weakness and cold weather in the northern hemisphere, the market fundamentals are now very strong,” said Michelle Kwek, an analyst at Informa Global Markets in Singapore.

“In the near term, we could see prices test the $85 levels and the longer-term target would be around $90.”

But oil is still 43% below its July 2008 high of more than $147 a barrel.

China ended 2009 with record monthly imports of crude oil and soybeans and a strong appetite for iron ore and copper, while its aluminium and steel sectors saw a welcome increase in export volumes.

Monthly crude oil imports in the world’s second-largest energy consumer leapt above 20 million tonnes for the first time ever in December, reaching 21.26 million tonnes, up almost a quarter from November, according to Customs data published on Sunday.

Hopes that the frigid weather in the United States will help spur a drawdown in swollen oil inventories in data shown later this week are also keeping prices supported, analysts said. The US dollar deepened losses on Monday, with the index falling 0.62% against a basket of currencies, extending its biggest loss in six weeks after US jobs data disappointed on Friday.

US employers unexpectedly cut 85,000 jobs in December, cooling optimism on the labor market’s recovery and keeping pressure on President Barack Obama to find ways to spur job growth.

Weak demand in the United States and other developed economies have weighed on oil prices, with energy markets looking to wider economic data for signs of a turnaround.

With little economic data due this week, analysts said traders will seek directions from the equities markets.

US stocks could be in for a bumpy ride this week as three Dow components kick off the quarterly earnings reporting season, with investors clamoring for reassurances on future profits.

On the supply side, Saudi Arabia, the world’s top crude exporter, will supply February crude oil at around 5% lower than contracted volumes to one Asia buyer, largely steady from January, industry sources said on Monday.

Chevron said on Saturday it had been forced to shut down 20,000 barrels per day (bpd) of crude oil production in Nigeria, a day after security sources said gunmen had attacked a pipeline operated by the US firm.